SEVEN PERNICIOUS EXAMPLES OF REGULATORY REVIEW

1.

Clean Air Act Permits

The 1990

At issue right at this moment is whether any of the Clean Air Act requirements will ultimately prove enforceable. amendments to the Clean Air Act direct EPA to establish a permit system. Each factory or other stationary source of air pollution must obtain a permit integrating all of the specific emission limitations and related requirements applicable to it. The permit is intended to be the primary vehicle (1) for applying and generally applicable emission standards, monitoring requirements, record keeping obligations, etc., to specific sources, and (2) for enforcing those requirements thereafter.

When considering what follows, it is important to understand that during the Clean Air Act deliberations Congress explicitly rejected alternative permit provisions that contained significant ∙loopholes for industry. Now industry and its White House allies are engaged in an effort to force into the EPA rules many of the loopholes they lost at the legislative stage.

The law requires EPA to issue final rules by November 15 ́establishing the "ground rules" for the minimum content of state permit programs. In the legislation, Congress expressly mandated opportunities for public involvement in, and EPA review of, state permit decisions. These opportunities are provided not only when permits are first issued. but also when they are modified, revised, or renewed. For industry, the permit system was intended to offer a limited shield against certain legal

liabilities when permits were properly applied for, issued, and complied with.

EPA began the development of the permit regulations last winter in an open and fair proceeding. Representatives of all sides attended a series of roundtable discussions to review successive drafts of the EPA rules. Although there were great differences, the process offered all sides not only the chance to present their own position, but to understand and respond to the position of opponents.

Each successive draft of the rules incorporated major concessions to regulated industries, but hard-line elements of industry wanted more. As exposed in hearings held by Chairman Henry Waxman's House Health and Environment Subcommittee, industry groups went to the White House agencies seeking detailed changes that radically undercut the enforceability of Clean Air Act obligations. On April 6, 1991, a member of the VicePresident's staff, David McIntosh, sent the head of EPA's clean air program a memo offering "suggested changes from the White House Counsel's office, the office of Policy Development, and O.I.R.A. [the OMB Office of Information and Regulatory Affairs]". The attachment was a marked-up draft of the permit rules that followed an industry wish-list for major weakening loopholes. Nearly every change appeared in EPA's proposed rules in May.

Foremost among these changes, the White House draft included a provision that would enable companies to rewrite their permits nearly at will, even when their emissions would increase. In

fact, the proposal set no upper limit on the size of this

pollution increase.

Moreover, state agencies were allowed just

seven days to object, and if they did not act within this time, the proposed rewrite would become effective automatically.

First,

The White House change would cause enormous damage. the scheme would allow sources to wipe out their compliance obligations whenever enforcement officials begin to close in. Second, permits could never be relied on to meet substantive Clean Air Act requirements because permit terms could be constantly changed without review.

The trumped-up rationale for this provision was that industry needed "flexibility" to change product lines or raw materials as markets shifted. EPA had originally rejected this claim, pointing out that the law allows firms to get "multiple "scenario" permits that authorize them to switch among different raw materials and products, provided emissions do not increase. If a firm wants to increase emissions, or to change operations to a path not previously anticipated, then the law requires an opportunity for public hearing and comment, and for EPA review. Time does not permit me to review the many other illegal changes were forced into the EPA permits proposal. They have met with a storm of opposition from states, local governments, and members of the public across the country who are attempting to participate in the implementation and enforcement of the nation's clean air law.

EPA's General Counsel has since concluded that the White

House-driven proposal is illegal and will not survive judicial review. I am attaching a copy of this legal opinion to my

testimony. The rules are back in the White House right now for a second review before final promulgation. While we anticipate

some cosmetic efforts to respond to criticism of the White House's original changes, industry is fighting hard to preserve the victory it was handed behind closed doors. If the White House agencies do not back down, NRDC and others will vigorously challenge the illegal rules in court.

In 1988, Vice President George Bush, then a candidate for President, endorsed a specific goal on recycling in an important speech on environmental issues. Declaring that "I am an

environmentalist," the Vice President stated:

We Americans produce 160 million tons of garbage every
year. We can produce less. We can recycle. We can
waste less. Japan's recycling rate is 50%, yet some
feel the EPA's national goal of a 25% reduction in
waste is excessive. I'd like to see us exceed that
goal in my first term.

Taking him at his word, EPA proposed to include a "source
separation" requirement in air emission standards for

incinerators. After a suitable phase-in period, incinerator operators (or the communities they serve) would be required to separate and not burn 25 percent of the garbage that otherwise

7

George Bush for President, Excerpts of Remarks for Vice President George Bush Environmental Policy Statement, Erie Metropark, Michigan, at pp. 1, 6 (Aug. 31, 1988), reprinted in New York Times (Sept. 24, 1988), p. 27 (col. 6).

would be combusted.

EPA also proposed to prohibit incineration

of lead-acid motor vehicle batteries weighing more than 11

pounds.

Not only would these requirements reduce air pollution, they would pay for themselves. EPA performed a cost-benefit analysis

which found that sales of recovered materials would meet or exceed collection costs, so that the program would impose no costs or net a savings. EPA recognized, however, that recycling markets could be weak in certain areas and certain times. То protect incinerator operators against incurring costs, EPA included in the proposal a waiver allowing them to resume burning of 100% of the garbage whenever recycling markets were too weak to cover program costs. In other words, this environmentally beneficial proposed regulation could not impose net costs on individual incinerators or the economy as a whole.

In December 1990, however, just before it was to be promulgated, an alliance of lobbyists for incinerator building companies and some local governments blitzed OMB and the Council on Competitiveness with pleas to overrule the EPA proposal. Despite the fact that the waiver guaranteed that there could not be net costs from the rule, OMB responded to the lobbyists urgings and declared that the rule did not meet cost-benefit tests. On appeal from EPA Administrator Reilly, the Competitiveness Council announced the same conclusion. The Council also rejected the prohibition on burning automobile batteries, without a word of explanation.